ANTONIO ENRIQUEZ DE LA CAVADA vs ANTONIO DIAZ

G.R. No. L-11668            April 1, 1918

FACTS:

Parties entered into a “contract of option” which involves a hacienda at Pitogo consisting of 100 and odd hectares, owned by respondent. The said contract stipulated how the price of the property will be paid; for which the petitioner herein may pay him either the sum of thirty thousand pesos (P30,000), Philippine currency, in cash, or within the period of six (6) years, beginning with the date of the purchase, the sum of forty thousand pesos (P40,000), Philippine currency, at six per cent interest per annum.

After the execution of the contract, defendant filed a petition with the Court of Land Registration in order to obtain the registration of a part of the hacienda, which was granted.

Later, and pretending to comply with the terms of said contract, the defendant offered to transfer to the plaintiff one of said parcels only, which was a part of said "hacienda." The plaintiff refused to accept said certificate for a part only of said "hacienda" upon the ground (a) that it was only a part of the "Hacienda de Pitogo," and (b) under the contract (Exhibits A and B) he was entitled to a transfer to him all said "hacienda."

The theory of the defendant is that the contract of sale of said "Hacienda de Pitogo" included only 100 hectares, more or less, of said "hacienda," and that by offering to convey to the plaintiff a portion of said "hacienda" composed of "100 hectares, more or less," he thereby complied with the terms of the contract.

Lower Court ruled in favor of Petitioner.

ISSUE:

Whether or not the defendant was obliged to convey to the plaintiff all of said "hacienda."

HELD:

A promise made by one party, if made in accordance with the forms required by the law, may be a good consideration (causa) for a promise made by another party. (Art. 1274, Civil Code.) In other words, the consideration (causa) need not pass from one to the other at the time the contract is entered into.

The said contract (Exhibits A and B) was not, in fact, an "optional contract" as that phrase is generally used. Reading the said contract from its four corners it is clearly as absolute promise to sell a definite parcel of land for a fixed price upon definite conditions. The defendant promised to convey to the plaintiff the land in question as soon as the same was registered under the Torrens system, and the plaintiff promised to pay to the defendant the sum of P70,000, under the conditions named, upon the happening of that event. The contract was not, in fact, what is generally known as a "contract of option."

An optional contract is a privilege existing in one person, for which he had paid a consideration, which gives him the right to buy, for example, certain merchandise of certain specified property, from another person, if he chooses, at any time within the agreed period, at a fixed price. The contract of option is a separate and distinct contract from the contract which the parties may enter into upon the consummation of the option.

A contract of option is a contract by virtue of the terms of which the parties thereto promise and obligate themselves to enter into contract at a future time, upon the happening of certain events, or the fulfillment of certain conditions.